NEWTON, Mass., March 9, 2004 - The simple strategy for technology businesses is to innovate or die. NanoLab Inc. takes that wisdom to heart, even in the fledgling world of carbon nanotubes.

The tiny spinout from Boston College formed four years ago to manufacture and sell carbon nanotubes. Revenues have
risen nicely, from $191,500 in 2001 to nearly $675,000 last year. And, yes, the company does make a profit.

Still, NanoLab's founders know that nanotubes eventually will be a high-volume, low-margin commodity business. So
they relentlessly try to move upstream, developing more complicated structures: nanotweezers, nanowires, positioning
equipment - whatever customers want and that they cannot find elsewhere.
"We act as a machine shop for the nanoscale world," said David Carnahan, NanoLab's president and head of business
development. "For now that delivers a fair amount of value."
Along with Carnahan, the other two pillars of the NanoLab triumvirate are Zhifeng Ren and Krzysztof Kempa. Ren is the
most well known, for his pioneering work perfecting a technique to forge nanotubes as neatly aligned patterns rather than a
jumbled mess; he manages NanoLab's nanotube manufacturing operations. Kempa directs theoretical research into new
applications.
The three incorporated NanoLab in January 2000. By March they began shipping their first products, mostly bulk supply
of multiwall nanotubes. The company "limped along on nanotube sales" and used the revenue to fund in-house research into
nanoscale devices, Carnahan said. (NanoLab has not raised any venture capital to date.)
Commercial customers include Boeing, Samsung, Sony and Raytheon. They account for 25 percent of NanoLab's revenues,
while the remaining revenue comes from sponsored research.

Exactly what those customers do with their nanotubes, "some we know, some we don't know," Carnahan said with a shrug. But
NanoLab has seen increasingly precise requests for specific sizes and amounts of tubes, he added. "The sophistication of the
buyer has improved tremendously."

Girish Solanki, a Frost & Sullivan analyst who follows nanotech developments, agrees that nanotubes offer
a long growth curve for shops like NanoLab. He estimates that more than 150 companies are considering nanotubes for composite
materials alone. Solanki expects the worldwide demand for nanotubes to hit $600 million by 2010, or potentially much more if
nagging large-scale manufacturing problems are solved.

Aligned carbon nanotubes are grown at NanoLab using a chemical vapor deposition process. The honeycomb pattern shown here was created by patterning the catalyst with a self-assembly lithography process.

"People are looking at a lot of applications," Solanki says. "The thing is, they produce them in pilot-level
amounts."

NanoLab also does considerable work for the military. In November the company landed a $750,000 grant from the U.S.
Army
to continue research on how nanotubes can bolster the strength of body armor. The grant was awarded through the Soldier Systems Center in nearby Natick, Mass., which has
worked with NanoLab for years.

Michael Sennett, a research officer at the Soldier Center, said NanoLab has demonstrated "very promising" results so
far
by doping ceramics with nanotubes. The latest grant will let NanoLab make that material in larger amounts, which the Soldier
Center will then place into body armor and test.

NanoLab is actually one of two startups working with the Soldier Center on body armor; the other is MER Corp. in Tucson, Ariz. "They both stood out for their technical
expertise and both demonstrated expertise in synthesizing the tubes, which is no easy task," Sennett said.

NanoLab can currently make as much as 100 grams of nanotubes per day. Carnahan expects that volume to rise to 1
kilogram
soon with some newly purchased equipment. He does not, however, feel threatened by the countless potential rivals striving to
make nanotubes in large volume - thus making it a low-profit product.

Rather than supply tubes as a commodity, Carnahan hopes to promote that machine-shop image: a small, skillful
supplier
that delivers tubes with a customer's desired morphology. "There's always going to be a customer who knows exactly what he
needs," he said.